Report sheds light on LIPA's rising rates

The 10-year increase in electric bills is highlighted

The 10-year increase in electric bills is highlighted in the context of LIPA's original mission statement to keep soaring rates in line. (2011) (Credit: Ed Betz, 2011)

Joye Brown

Newsday columnist Joye Brown Joye Brown

Joye Brown has been a columnist for Newsday since 2006.

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Gov. Andrew M. Cuomo, at Cold Spring Harbor lab on Friday to tout the region's impressive use of state economic development dollars, had no comment on a study that castigated the Long Island Power Authority for its high electric rates and high-paid executives.

Cuomo said he hadn't read the report released last week by state Comptroller Thomas DiNapoli, which reaffirmed what local businesses and homeowners already know: We pay some of the highest electrical costs in the nation.

Maybe Cuomo had no need to read DiNapoli's report. Cuomo already has ordered a long-overdue overhaul of LIPA, which he would like to see pared down and pushed back toward its founding mission as an advocacy group for Long Island ratepayers and a holding company to handle debt resulting from the Shoreham nuclear power plant's shutdown in 1989.

For the rest of us, however, DiNapoli's study certainly is instructive.

LIPA customers pay $463 more a year for electricity than they did 10 years ago. It's not that the rate -- or more precisely, LIPA's base rate or delivery charge -- increased. It remained pretty much the same or decreased since 2001, according to the study.

So why the bigger bills?

It's the so-called power-supply charge, which increased average customer bills by as much as $52 per month in some cases. The charge covers the fuel LIPA uses to generate electricity, as well as the cost of electricity LIPA purchases from other companies to supply local needs.

So what does it all mean?

"LIPA's rates have consistently outpaced those of other utilities in New York State, the Northeast and the United States," the study said. "While the average retail price in the residential sector has risen in all markets over the past decade, ratepayers on Long Island have experienced consistently higher prices and, at times, faster growth."

By the numbers, our average retail cost for electricity grew 42 percent over 10 years, compared with 33 percent in New York State and 27 percent nationwide, according to DiNapoli.

During the same period, LIPA increased the size of its staff by almost 57 percent. They are paid really, really well too. According to the study, almost half of LIPA's staff earns more than $100,000 a year.

Those 10 vice presidents and 32 directors account for 70 percent of LIPA's compensation expenses, according to the study.

By comparison, the percentage of employees making more than $100,000 at state public authorities as a whole was 13 -- compared with 8.3 percent of state employees and 13 percent of state residents.

The study also found that LIPA incurred overly high costs to handle storms; that it scrapes bottom in customer confidence; that its operation is opaque and that it has agreed to millions of dollars in noncompetitive contracts.

LIPA officials say portions of the cost increase are rooted in factors, like property taxes, that are beyond the authority's control. They also are listening to Cuomo and are making changes.

Last year, Cuomo asked the state Inspector General to investigate LIPA's billing and rate-paying practices. That report has yet to be released. But, given all that's come before, it's likely to add fuel to the LIPA-Must-Reform fire.